Why would a bankruptcy trustee apply to appoint legal counsel?

When you file for bankruptcy you must appear in front of a trustee, who has the responsibility of overseeing your bankruptcy. While the trustee mainly has the duty to review the bankruptcy petition, examine the debtor under oath, and oversee the payment of creditors, there are times when a trustee might actually need to hire an attorney.

If your trustee has applied to hire legal counsel, this usually means that the trustee sees a red flag somewhere in your petition or among your assets. He may need to explore a particular issue further before approving it, or the trustee may see a potential fraudulent transfer that needs to be addressed.

The trustee may also need to pursue is preference actions. Preference suits involve payments to specific creditors rather than following the payments or amounts due according to the bankruptcy process. The trustee can also file suits outside of the bankruptcy system in order to increase the source of funds for the debtor to pay off his debts with. Examples of these types of actions are personal injury or insurance coverage suits.

If your trustee has filed to appoint legal counsel, or if you are considering filing bankruptcy, contact Dailey Law Offices to set up your free initial consultation in our Delaware or Hilliard location.


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